GRAINS – U.S. Soy, Wheat Increase Half Percent Following Fed Decision – By Reuters

Soybean and Wheat Futures Climb Following Federal Reserve Actions

U.S. soybean and wheat futures experienced a rise of approximately 0.6 percent on Thursday, with corn also seeing a slight increase of 0.3 percent. This uptick follows the Federal Reserve’s decision to enhance liquidity in financial markets through bond purchases.

The Fed announced a new initiative to bolster the struggling U.S. economy, committing to acquire $600 billion in government bonds. Despite reservations regarding the potential negative impacts of the program, the move was seen as supportive of commodity prices.

"Following the Fed’s quantitative easing announcement, there has been a notable gain across the commodity sector, with soybean, corn, and wheat all benefiting from a weaker U.S. dollar," commented Luke Mathews, a commodity strategist at the Commonwealth Bank of Australia.

As of 0319 GMT, December wheat on the Chicago Board of Trade (CBOT) increased by 0.6 percent to $6.94-½ per bushel, while November soybeans rose by 0.65 percent to $12.35-½ per bushel. CBOT December corn was up 0.3 percent, reaching $5.82-½ per bushel.

The U.S. dollar weakened significantly after the Federal Reserve’s controversial policy on government debt purchases, recently touching its lowest point since 2010 against a basket of currencies and hitting a 28-year low against the Australian dollar.

Market participants are now shifting their attention to an upcoming report from the U.S. Department of Agriculture (USDA) regarding global agricultural demand and supply, set to be released on Tuesday.

"The grain market will increasingly focus on the USDA crop report. While external markets will remain significant, discussions are rising about potential supply downgrades in the U.S., particularly regarding corn," noted Mathews.

Analysts predict the USDA will likely reduce its U.S. corn crop production estimate, following a 4 percent cut the previous month due to adverse late-summer weather affecting yields. A similar reduction is anticipated for U.S. soybean harvest estimates, following a 2 percent drop in October.

Informa Economics has projected the U.S. 2010 corn crop at 12.592 billion bushels, with an average yield of 155.0 bushels per acre, which is a reduction from their prior estimate of 12.9 billion bushels. Conversely, Informa slightly raised its 2010 soybean production forecast to 3.425 billion bushels, reflecting an average yield of 44.6 bushels per acre.

Concerns regarding dry weather in the U.S. wheat belt have compounded issues already faced this year, such as severe droughts in Russia leading to an export ban. However, recent forecasts indicate rain in Kansas, the top wheat-producing state in the U.S., next week.

Current Prices as of 0319 GMT:

• CBOT Wheat: $694.50 (+0.62%)
• CBOT Corn: $582.50 (+0.26%)
• CBOT Soybeans: $1246.50 (+0.73%)
• WTI Crude: $85.26 (+0.67%)

Currency Rates:

• Euro to USD: $1.414 (+1.24%)
• Australian Dollar to USD: $1.005 (+2.02%)

Editor: Clarence Fernandez